NFIB reported that its Small Business Optimism Index rose a larger than expected 1.7 points to 100.3 in July, its highest in five months. The index remains above its 52-year average of 98.

The consumer price index increased 0.2% in July, a pace right in line with expectations and the same as last month. This follows a 0.3% rise in June, and over the last 12 months, headline CPI increased 2.7% y/y. Shelter prices rose 0.2% during July and energy prices declined.

Our first regional Fed survey for August manufacturing and it was positive. The New York Fed reported that business activity rose modestly in New York during August with the headline general business conditions index rising 6.4 points to +11.9. New orders and shipments increased.

Retail sales rose 0.7% in July and follow a 0.9% gain in June. The largest increases were seen in sales at motor vehicle & parts dealers and furniture & home furniture stores.

Headline capacity utilization for industry moved down 0.2 points to 77.5% in July, a rate that is 2.1 percentage points below its long-run (1972–2024) average. During July, operating rates fell in manufacturing, mining, and utilities.

industrial production (IP) eased 0.1% in July, missing expectations of a flat reading but following an upwardly revised 0.4% rise in June. At 104.0% of its 2017 average, total IP in July was 1.4% y/y. Manufacturing output was unchanged after a 0.3% gain in June.

The housing report was mixed with housing surprising to the upside, reaching a 1.43-million-unit pace in July. But the gain was largely centered in multi-family housing. Moreover, building permits declined for a fourth month.

US existing home sales rose 2.0% to a 4.01-million-unit pace in July. Sales rose in the Northeast, South, and West but declined in the Midwest. During the month, the inventory of homes for sale rose to 1.55 million units, a 4.6 months’ supply at the current sales pace.

Our second regional Fed manufacturing survey for August and it was slightly negative. The Philadelphia Fed reported that manufacturing activity in the region weakened this month. The current general activity index fell 16.4 points to a slightly negative -0.3 reading.

New homes sales, after rebounding in June, edged down 0.6% to a 652K-unit-pace in July. Sales in the Midwest and South were soft and sales in the West improved. Sales in the Northeast were flat. The inventory of homes for sale also edged down. Inventories remain high.

Our fourth regional Fed survey for August manufacturing and it was soft. The Richmond Fed reported that Fifth District manufacturing activity remained soft in August. The composite manufacturing index rose to -7 in August from -20 in July. This is still in negative territory.

The Kansas City Fed reported that during August its composite index of current conditions was unchanged at 1 in August. Production ticked up from -3 to 0 and the employment index increased modestly from -11 to 0.

Real consumer spending rose an expected 0.3% in July, an improvement from the 0.1% rise in June, and a 0.2% set-back in May. Spending rose sharply for durable goods and also rose for non-durable goods and services. Real consumer spending was up 2.1% y/y. Americans love to shop!

If I was limited to one chart to illustrate the state of the US economy this would be it. Industrial production edged down, largely due to weather. Non-farm payrolls edged up, real personal income less transfer payments featured a solid gain, and business sales improved.

Something is amiss in the Windy City. The Chicago PMI declined a larger-than-expected 5.6 points to 41.5 in August. This marks the 21st month of a contractionary reading.

After a surprise 0.1% decline in the PPI yesterday, the Bureau of Labor Statistics (BLS) reported that CPI rose a larger-than-expected 0.4% in August. The shelter component was the largest factor in this gain.

During August, retail sales rose 0.6% and follows a solid 0.7% gain in July. Gains across segments were widespread. There was weakness in furniture & home furnishing stores, health & personal care stores, department stores, and miscellaneous retailers.

US industrial production rose 0.1% in August, partially offsetting a 0.4% decline in July. Mining output moved up 0.9% percent while that for utilities decreased 2.0%. Manufacturing output rose 0.2% in August after edging down 0.1% in July.

Despite production edging up, headline capacity utilization for all industry was stable at 77.4% in August, a rate that is 2.2 percentage points below its long-run (1972–2024) average.

US existing home sales eased 0.2% to a 4.00-million-unit pace in August. Dales rose in the Midwest and West but retreated in the Northeast and South. Inventories of homes for sale fell 1.3% to 1.53 million. Months’ supply was stable at a near normal 4.6 months.